Acxiom Reports Fourth-Quarter, Fiscal-Year Results
Revenue up 21%, EPS grows 16% in fiscal 2005
LITTLE ROCK, Ark. -- May 11, 2005 – Acxiom Corporation (Nasdaq:ACXM) today reported fourth-quarter and full-year financial results for fiscal 2005 ended March 31, 2005. Fourth-quarter results include revenue of $322.5 million, income from operations of $23.0 million and diluted earnings per share of $.16. The fourth-quarter results include the impact of a $3.6 million non-cash charge related to the accelerated vesting of stock options. Full-year results include revenue of $1.223 billion, income from operations of $122.2 million and diluted earnings per share of $.74. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. The Company will reference presentation slides that will be available on the website prior to the call.
“Our U.S. business remained solid in the fourth quarter and through the fiscal year, despite some reductions in credit card mailing volumes,” Company Leader Charles D. Morgan said. “U.S. revenue grew 9 percent for the fiscal year. While our international operation didn’t meet the expectations that we set for their business, we were able to integrate two large, historically unprofitable data businesses across seven countries in Europe with our U.K. based services business and generate a profit for the fiscal year. We also believe that the recent acquisitions of Smart DM and Digital Impact will enhance and expand Acxiom’s value proposition – inside and outside the U.S.”
Details of Acxiom’s fourth-quarter performance include:
• Revenue of $322.5 million, a 16 percent increase over $277.8 million in the fourth quarter of fiscal 2004. Acquisitions contributed 4 percentage points of this 16 percentage-point growth in revenue.
• Income from operations of $23.0 million, a 4 percent increase from $22.0 million the year before.
• Diluted earnings per share of $0.16, down 6 percent from $0.17 in the same period a year ago.
• A non-cash charge of $3.6 million related to the acceleration of vesting of stock options, which reduced income from operations by $3.6 million and reduced diluted earnings per share by 2.3 cents for the quarter.
• Operating cash flow of $67.8 million and free cash flow of $40.2 million. The free cash flow of $40.2 million is a non-GAAP financial measure, and a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release.
• New contracts that are expected to deliver $42 million in annual revenue and renewals that total $42 million in annual revenue.
• Committed new deals in the pipeline that are expected to generate $62 million in annual revenue.
• The announcement of our agreement to acquire Digital Impact, a leading provider of integrated digital marketing solutions, based in San Mateo, California. This acquisition closed following the completion of the fourth quarter.
• The acquisition of SmartDM, a full-service direct marketing firm based in Nashville, Tenn., that offers comprehensive direct marketing services and information management for mid-sized companies.
Morgan noted that Acxiom recently completed contracts with Providian Financial Corporation; Deluxe Corporation; Lands’ End, Inc.; Bankers Life and Casualty, a subsidiary of Conseco Inc.; RR Donnelley & Sons Company; Marriott Vacation Club International; Juniper Bank; Nationwide Mutual Insurance Company; Southeast Toyota Distributors, LLC; FranklinCovey; and Advance Publications Inc.
Fiscal 2005 highlights:
• Revenue of $1.223 billion, up 21 percent from $1.011 billion a year ago. Acquisitions contributed 11 percentage points of this 21 percentage-point growth in revenue.
• Diluted earnings per share of $.74, a 16 percent improvement over $.64 in fiscal 2004.
• Operating cash flow of $247.0 million.
• Free cash flow of $159.0 million.
• New contracts that are expected to deliver $137 million in annual revenue and renewals that also total $168 million in annual revenue. Highlights include a new 15-year contract with Information Resources, Inc. (IRI), including renewal options after years 5 and 10, that is expected to average $25 million to $30 million in annual revenue; and a five-year extension of Acxiom’s data center management outsourcing agreement with TransUnion with an estimated average annual revenue of $60 million to $70 million.
• The acquisition of ChinaLOOP, a pioneering business intelligence, customer relationship management and data management company based in Shanghai, China.
• The purchase of 2.97 million shares of Acxiom stock through the company’s stock buy-back program at a total cost of $67.4 million. From the program’s introduction in December 2002 through March 31, 2005, the Company has purchased a total of 9.1 million shares of Acxiom stock at a total cost of $158.6 million.
• An increase in the Company’s quarterly cash dividend, which was raised from 4 cents per share to 5 cents per share in February 2005.
• The redemption of a $175 million convertible bond in February 2005, resulting in an annual cash savings of approximately $6.6 million.
Fiscal 2005 Recognition
In fiscal 2005, Acxiom was:
• Included in the Computerworld Honors Program for its Customer Information Infrastructure (CII) grid-computing technology.
• Named to the DM Review 100.
• Honored by Computerworld as one of the 100 Best Places to Work in Information Technology.
• Listed in CIO magazine’s “CIO 100 for IT Agility.”
• Honored by CRM magazine with its “CRM Data Quality Market Leader Award.”
• Included in InformationWeek magazine’s “InformationWeek 500 for Innovative Use of Information Technology.”
• Honored with a TDWI Best Practices in Data Warehousing award in the “Radical Data Warehousing/Business Intelligence” category.
Road Map and Outlook
Fiscal 2005 U.S. revenue of $1.011 billion exceeded the range of $991 million to $1.010 billion the Company projected in its Financial Road Map. International revenue of $213 million for the year was slightly below the Road Map range of $215 million to $225 million. U.S. operating margin, which was impacted by the $3.6 million non-cash charge, was 11.3 percent for fiscal 2005 compared to a projected range of 12 to 12.5 percent. International margin of 3.9 percent was below the 5 to 7 percent projected range.
Acxiom’s Financial Road Map has been updated based on current expectations for fiscal year 2006, and the long-term goals reflect expected performance in fiscal 2009. For the fiscal year ended March 31, 2006, the Company estimates that: U.S. revenue will grow 13 percent to 15 percent, the U.S. operating margins will be 11.5 percent to 12.5 percent, international revenue will grow 0 percent to 5 percent (5 to 10 percent when adjusted for the recent divestiture of letter shop operations in Germany) and international margin will be 4.5 percent to 6.5 percent.
The financial projections stated today are based on the Company’s current expectations and the assumptions and limitations set forth in the Financial Road Map. These projections are forward looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed in the future.
About Acxiom
Acxiom Corporation (Nasdaq: ACXM) integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom’s innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, with locations throughout the United States and Europe, and in Australia and China.
For more information, visit www.acxiom.com.
This release (including references to the Financial Road Map) and the scheduled conference call include a discussion of non-GAAP financial measures. Whenever the Company reports non-GAAP financial measures, there is a reconciliation to the comparable GAAP measure attached to the press release.
This release, presentation slides and today’s conference call contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially. Such statements may include but are not necessarily limited to the following: that the projected revenue, operating margin, return on assets and return on invested capital, operating cash flow and free cash flow, borrowings, dividends and other metrics referred to in the Financial Road Map will be within the estimated ranges; that the business pipeline and our current cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections; that new contracts and contract renewals will generate the indicated amounts of revenue; that we have committed new deals in the pipeline that are expected to deliver the indicated amounts; that the recent acquisitions of SmartDM and Digital Impact will enhance and expand Acxiom’s value proposition – inside and outside the U.S.; that future results will be within the indicated ranges; that new products and services will produce the expected results.
The following are important factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that certain contracts may not be closed, or may not be closed within the anticipated time frames; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility of an economic slowdown or that economic conditions in general will not be as expected; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the integration of acquired businesses may not be as successful as planned; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that sales cycles may lengthen; the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations; the possibility that we won’t be able to properly motivate our sales force or other associates; the possibility that we won’t be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won’t be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or competitive products and services; the possibility that there will be changes in consumer or business information industries and markets; the possibility that changes in accounting pronouncements may occur and may impact these projections; the possibility that we won’t be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and use data; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services; the possibility that we may enter into short-term contracts which would affect the predictability of our revenues; the possibility that the amount of ad hoc, volume-based and project work will not be as expected; the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources; the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; the possibility that postal rates may increase, thereby leading to reduced volumes of business; the possibility that our clients may cancel or modify their agreements with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that we experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the possibility that the services of the United States Postal Service, their global counterparts and other delivery systems may be disrupted; and the possibility that we may be affected by other competitive factors.
With respect to the Financial Road Map exhibit, all of the above factors apply, along with the following which were assumptions made in creating the Financial Road Map: that the U.S. and global economies will continue to improve at a moderate pace; that global growth will continue to be strong and that globalization trends will continue to grow at an increasing pace; that Acxiom’s computer and communications related expenses will continue to fall as a percentage of revenue; that the Customer Information Infrastructure (CII) grid-based environment Acxiom has begun to implement will continue to be implemented successfully over the next 3-4 years and that the new CII infrastructure will continue to provide increasing operational efficiencies; that the acquisitions of companies operating primarily outside of the United States will be successfully integrated and that significant efficiencies will be realized from this integration; relating to operating cash flow and free cash flow, that sufficient operating and capital lease arrangements will continue to be available to the Company to provide for the financing of most of its computer equipment and that software suppliers will continue to provide financing arrangements for most of the software purchases; relating to revolving credit line balance, that free cash flow will meet expectations and that the Company will continue to use free cash flow to pay down bank debt, buy back stock and fund dividends; relating to annual dividends, that the Board of Directors will continue to approve quarterly dividends and will vote to increase dividends over time; relating to diluted shares, that the Company will meet its cash flow expectations and that potential dilution created through the issuance of stock options and warrants will be mitigated by continued stock repurchases in accordance with the Company’s stock repurchase program.
With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations.
Other factors are detailed from time to time in our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast.
We undertake no obligation to update the information contained in this press release, including the Financial Road Map or any other forward-looking statement.
Acxiom is a registered trademark of Acxiom Corporation.
DISCLAIMER: The information contained in this item was current as of the date of original publication, but may not still be current. Some of the information may have been "forward-looking" based upon then current expectations, forecasts, and assumptions that involved risks and uncertainties that could cause actual outcomes and results to differ materially. We disclaim any intention or obligation to update or revise this information (including any forward-looking information), whether as a result of new information, future events, or otherwise.
For more information, contact:
Investor Relations
Acxiom Corporation
(501) 342-1321
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